3.1 - Production Processes

What is production?

A transformation process that changes resources into goods and services

What is the input stage of production?

This includes resources, such as natural resources and raw materials

What is the process stage of production?

When the input is transformed into finished products

What is the output stage of production?

The output is the finished product or service

What is labour intensive production?

"Labour intensive is when products are mainly produced by human workers. Machines and special tools may be used too, but overall it requires human creativity and effort to produce the product."

What are the advantages of labour intensive production?

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Customised products are easier to make

What are the disadvantages of labour intensive production?

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Quality of products can vary due to expertise of the worker

Skilled workers take time to train

High labour costs/wages

Have to follow health + safety regulations and all other admin concerning employees

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What is capital intensive production?

Capital intensive is when products are mainly produced by machines and robots, meaning the initial investment and maintenance will be very high.

What are the advantages of capital intensive production?

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Less employee wages and costs

What are the disadvantages of capital intensive production?

More difficult to customise orders

Breakdowns in production can be costly

Initial set up costs of machinery are high

What is job production of products?

When a business produces products that meet the specific requirements of the customer.

Each time a new product is made, changes may need to be made to the production process. It is highly specialised and very labour intensive.

What is an example of job production?

Some examples of job production may include made-to-measure clothes, handmade crafts and bridges.

What are the advantages of job production?

The business may be able to charge a higher price for the product

Products are likely to be high quality - high quality raw materials + skilled staff

The variety of work may mean employees are less likely to become bored and demotivated at work

USP - Unique products to the specific requirements of customers

What are the disadvantages of job production?

Expensive to produce as each product is different + requires high quality raw materials

Employees need to be skilled and may require training

Takes a long time to make each product

Labour intensive - wages

Small customer base limits revenue due to not many people being able to afford

What is flow production?

Flow production occurs when a business makes large numbers of identical products on a continuous production line. 

Give some examples of flow production products

Some of examples of flow production include chocolate bars, televisions and bottled drinks.

What are the advantages of flow production?

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The business is able to produce large volumes of products to sell, increasing revenue

Employees can specialise in a small number of tasks - division of labour - become skilful at this task and need less training and are more productive

Producing in large quantities reduces the cost per unit

Automated assembly lines save time and money + can go 24h a day

What are the disadvantages of flow production?

Overuse of machinery can lead to them breaking down

A lack of flexibility, as all products need to be identical or fairly similar

Employees may become bored or demotivated due to their limited range of tasks, decreasing efficiency + increasing costs, high labour turnover

Large investment into things like expensive machinery leads to increased risks

Difficult to differentiate products from competitors, affecting market share

What is lean production?

Lean manufacturing is based on minimising costs and maximising efficiency by cutting down on waste and the amount of materials and energy used in production.

What are the seven wastes?

Overproduction, waiting, transporting, unnecessary inventory, motion, over-processing and defects

OWTUMOD

What is overproduction?

Producing goods before customers demand them - high storage costs and possible damage to goods waiting to be sold

What is waiting?

Whenever goods are not moving on to the next stage of production

What is transporting?

Too much handling can cause damage

What is unnecessary inventory?

Having too much stock takes up space and gets in the way of productive activity

What is motion?

Employees unnecessarily bending, stretching and other body movements wastes time

Health and safety risk

What is over processing?

Using complex equipment to carry out tasks can be wasteful

What is defects?

Products that are poorly made have to be rejected, and time is wasted inspecting for faults

What is Just In Time production?

When a business holds no stock and instead relies upon deliveries of raw materials and components to arrive exactly when they are needed (when a customer places an order)

What are the advantages of JIT production?

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No money is tied up in inventory meaning it can be used elsewhere in the business - less cashflow issues

Less storage space/warehousing is required which will reduce costs

What are the disadvantages of JIT production?

Delay in receiving orders from suppliers will lead to production having to stop - very dependant on suppliers

Vulnerable to transport disruptions - may damage reputation

Lose out on economies of scale as fewer bulk orders will be required

Stock being delivered frequently increases administration and delivery costs

Difficulty coping with unexpected changes to demand leading to a loss of sales

Frequent delivery of stock increases carbon footprint damaging the image of the business

What is efficiency in business?

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Efficiency measures how well a business uses its resources to make its products or provide its service. Producing as many items as possible as quickly as possible with minimum costs and minimum waste

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What is Kaizen?

The process of introducing constant small improvements to a business' processes. Employees are encouraged to suggest improvements, as they deal with these processes on a daily basis

How can efficiency in business be measured?

Efficiency can be measured using cost per unit.

How does Kaizen benefit employees?

- Allows them to feel like a part of the decision making process

- Improvement of leadership and teamwork

- Feel much more valued as ideas are taken into account (motivates them)

How does Kaizen benefit the business?

- Motivates employees to get more involved in decision making, making them motivated to work harder, leading to lower labour costs per unit and therefore more profit

- Leads to a commitment to constant improvement, keeping it 1 step ahead of the competition

What are the negatives of Kaizen?

- If employees' suggestions cannot be implemented, this could lead to them becoming disappointed and therefore less motivated to work, increasing labour costs/unit

- Suggestions may be too costly or ambitious

- Constant improvements may add up to be quite costly for the business

- Employees need to be motivated and committed to improving the business

What is production management?

An area of management concerned with designing and controlling the process of production